BONE CHILLER. The feds seemingly have shoved aside their investigations of investor-owned hospital chains (Fumigate!), group purchasing organizations (GPOgate!) and pharmaceutical companies (Pharmagate!) in order to add another player to the mix: Orthopedic device and implant manufacturers (Orthogate!). Several of the major orthopedic manufacturers acknowledged receiving subpoenas from the Department of Justice, which is conducting yet another archeological dig into alleged anticompetitive and unethical practices in the healthcare industry. The litany includes consulting contracts, professional service agreements and remuneration agreements with hospitals and individual orthopedic surgeons, surgeons-in-training and graduate medical students that "encourage" them to use specific products and brands. In fact, some manufacturer sales reps are so chummy with their customers they practically bunk in an operating room cabinet or serve as a de facto, unofficial technocentric circulating assistant.

No one’s suggesting that these reps are even touching the patients on the surgical table or physically manipulating the surgeons’ hands or nudging aside any other medical personnel and the idea of illegal kickbacks is a juicy rumor simmering below the surface. But it’s clear that vendors who seemingly sidestep materials management oversight for easy access to their favorite surgeon customers remain a pesky challenge for hospital operations and the government. Law enforcement officials shouldn’t be surprised by these activities, which have gone on for decades in the medical device community – perhaps as long as these activities have been artfully mastered by the drug companies. Of course, the Big Pharma firms are more lucrative prey than the medical device companies. With all the political contributions these companies make it’s unlikely much will happen unless something truly criminal is uncovered that’s ghastly enough to whip up media outrage and public outcry. Certainly rooting out all of the suspected dirty laundry in the healthcare industry may cut as many costs as President Bush’s proposed healthcare information technology initiative but legal eagles aren’t finished yet. They’ve got to shake up the payer segment and start scrutinizing the questionable decisions of insurance companies and managed care organizations. Grafting them to the drug and device vendor communities and the accounting-scandal-plagued for-profit hospital chains will only make the GPO investigations seem like shaving nickels off a multimillion dollar contract.

AD RAP. Free oil change with your lap chole! Well, we haven’t stooped that low yet but a group of researchers have been sniffing around academic medical center advertising practices, focusing in particular on the lack of content oversight. Not surprisingly, much of the advertising is centered on attracting patients. The panel found that many patient-directed ads appealed to emotions, highlighted an institution’s prestige, spotlighted a disease or symptom and how the facility can help, promoted the benefits of certain procedures (particularly cosmetic and elective) with nary a mention of potential dangers and a host of other trappings. In their study report they revealed how many facilities have more marketing checks-and-balances in place for attracting research subjects. Forget calling patients customers, folks! With revenue streams being challenged by crafty accounting practices, reimbursement cutbacks, marketing issues and overall administrative waste the only surefire way for hospitals to seemingly make a buck is to hire the Sopranos (ba-da bing!) to boost business, if-ya-know-what-I-mean.

DOUBLE TROUBLE. Net profits generated by the nation’s HMOs almost doubled in 2003, a new report from financial ratings firm Weiss Ratings indicated. HMOs earned $10.2 billion last year, up from $5.5 billion the year before, according to Weiss. Meanwhile, hospitals are on the hot seat for allegedly overcharging to compensate for providing care to the uninsured, and reimbursement rates continue to decline. Sniff, sniff. Anyone smell Fumigate 2?

MANAGED SCARE. Family premiums in employer-sponsored insurance plans spiked 11.2 percent, according to a study by the Kaiser Family Foundation and the Health Research and Educational Trust. For the record, that’s the fourth year of double-digit growth. Managed care certainly seems to be working…for somebody, but we won’t point fingers. In addition, both organizations found that at least 5 million fewer jobs are offering health insurance in 2004, compared to three years earlier. So, by a simple raise of hands, who’s going to be the first to blame the GPOs?

Think twice, readers.
Rick Dana Barlow